A bill introduced in the General Assembly would halt Rhode Island foreclosures for 180 days to allow legislators to find a lasting solution to the problem. But some Rhode Islanders aren’t convinced a six-month reprieve would be necessary or helpful.
The bill, introduced as S-0250 and H-5418, would also put a hold on tenant evictions, unless the eviction proceedings start before the foreclosure proceedings begin.
“The foreclosure crisis is hurting us all and affecting the whole community, not just those who lose their homes or their investments and not just those whose property values decline because of a high foreclosure rate in their neighborhood,” bill sponsor Sen. Harold R. Metts, D-Providence, said in a statement. “The social ills caused by all the upheaval that occurs when families and individuals are forced into homelessness is a problem that affects the whole state. The state, the federal government, the mortgage industry and the lenders all have the responsibility to work together to address this issue.”
Rhode Island Association of Realtors President Paul A. Leys hadn’t had a chance to read the legislation yet – the General Assembly Web site crashed early last week – but called it “anti-business” and said it might deter some lenders from working in the Ocean State. “We really don’t see it solving the problem,” he added.
University of Rhode Island economist Leonard Lardaro in an interview last week agreed that the bill likely wouldn’t help solve the foreclosure crisis.
“It’s treating a symptom and not a problem,” Lardaro said. “It says to these people, ‘OK, you have a reprieve.’ But then you’re back to reality in a few months. And things can actually be worse at that time.”
He added that for many Rhode Islanders foreclosure is now “largely inevitable.”
“You’re still going to have a default crisis in this state as long as the economic climate … is so awful,” Lardaro said.
The General Assembly bill isn’t the only attempt by Rhode Island government to quell foreclosures. Early last month, Providence Mayor David N. Cicilline started pushing for the city council to pass two anti-foreclosure ordinances. The first would require lender-and-borrower mediation – with a U.S. Department of Housing & Urban Development-certified mediator – before a foreclosure is initiated. The second ordinance would protect tenants in foreclosed properties, allowing them to remain for the extent of their lease.
Cicilline, who said he supports a 180-day moratorium on foreclosures, said it’s become government’s responsibility to try to mitigate the problem.
“Government’s role in this is to be sure that we do everything we can to stabilize neighborhoods in this city and to protect families that have been really affected,” he said, adding that it has a “direct” and “corrosive” impact on everyone in the city through property values, aesthetics and city revenue. “So this [ordinance] is really saying that before you go through a foreclosure, the city is requiring that you have one – only one – serious conversation about [whether] this foreclosure can be avoided.”
Providence foreclosures more than doubled in 2008, jumping to 1,577 from 718 in 2007, according to Cicilline’s office.
Rhode Island Housing Executive Director Richard Godfrey said his office hasn’t taken a position on the proposal in the General Assembly. “But we certainly believe that the state needs to do something to better protect the rights of homeowners and tenants,” he said.
Rhode Island Housing tracks monthly foreclosures in Providence and statewide and says there have been dips recently in the numbers. Godfrey said foreclosures were down in December because of the holiday season and again in February, when U.S. Rep. Jim Langevin, D-R.I., called for a temporary moratorium on new foreclosures.
“But I don’t see a trend downward at all,” Godfrey added. “It’s pretty high and it’s pretty steady.” •
